Q&A: Wants more REITs

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A reader already owns RioCan and H&R. What can he buy to complement them?

Q – I need more REIT exposure to comply with my asset allocation. There are quite a few REITs on your newsletter Recommended Lists. I already own RioCan and H&R REIT. Can you suggest one or two REITs that will complement the two I already own? – Ross N.

A – The two REITs you own give you exposure to shopping malls (RioCan) and office buildings (H&R). To complement them, you should choose REITs that focus on other real estate sectors.

My top choice would be Canadian Apartment Properties REIT (also called CAP REIT). It owns interests in about 36,000 residential suites and 30 manufactured home communities located in or near major urban centres in Canada. It trades in Toronto under the symbol CAR.UN and was originally recommended in the Internet Wealth Builder in July 2014 at $22.90.

If you prefer a REIT that owns U.S. residential properties, look at Milestone REIT (TSX: MST.UN), which has done well since being recommended in The Income Investor in September 2014 at $10.81.

For additional diversification, look at Pure Industrial REIT (TSX: AAR.UN). It focuses exclusively on investing in industrial properties in the U.S. and Canada. It was first recommended in The Income Investor in January 2012 at $4.60.

Ask your financial adviser if any of these are appropriate for you. – G.P.

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